- Bitcoin reacted to the release of May’s Consumer Price Index (CPI) data, wavering under $26,000 as investors anticipate Federal Reserve’s decision on interest rate hikes.
- The SEC lawsuits against Binance and Coinbase have provided market “certainty,” and are expected to foster fresh investments in the crypto industry.
The release of the May Consumer Price Index (CPI) saw Bitcoin, the world’s largest cryptocurrency, oscillate under the $26,000 mark. Currently trading at $25,846, a 0.2% decrease over the past day, the digital currency briefly climbed above $26,000 following the announcement that the CPI had risen by 4%, outperforming projections and underscoring April’s 4.9% climb.
Bitcoin has been fairly static below the $26,000 mark for the better part of four days, while investors await the Federal Reserve’s interest rate decision and monitor the effect of SEC lawsuits against crypto exchanges Binance and Coinbase.
The U.S. central bank may potentially end its over-a-year-long pursuit of interest rate hikes, a stance supported by the CPI’s deceleration from a staggering 8.6% a year ago. This inflation surge had previously instigated the Federal Reserve to augment the Federal Funds rate by 75 basis points (bps), triggering a downturn in risk-on assets.
Tim Frost, CEO of digital wealth platform, Yield App, suggested in an email to CoinDesk that any potential destabilization from the imminent interest rate decision or a possible recession could also prove beneficial for crypto assets. Furthermore, Frost argued that the SEC’s legal action against two of crypto’s leading enterprises provides “certainty” by ending speculation about the agency’s possible steps.
Frost asserted that these lawsuits might impel courts and regulators to determine a classification for cryptocurrencies, potentially facilitating fresh investments unrelated to U.S. economy or policies.
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Ether, the second largest cryptocurrency, mirrored Bitcoin’s fluctuating performance. Among the 19 tokens named in either Binance or Coinbase suits, Polygon and Algorand’s tokens showed marginal rises, while Axie Infinity’s native crypto saw a slight dip.
Traditional market indicators like Nasdaq Composite and S&P 500 rose by 0.8% and 0.6% respectively, after the CPI report. The yield on U.S. 10-year Treasurys stayed robust at 3.8%, while Brent crude oil stood at $73 per barrel, significantly down from its lofty $112 a year ago.
Crypto assets, vulnerable to shifts in macroeconomic indicators, continue to be monitored closely as the U.S. economy could potentially experience a quarter of negative growth, thereby heralding a recession if the trend continues into Q2. An impending recession might compel the Central Bank to pivot from tackling inflation to averting a recession, particularly with the 2024 US presidential election campaign nearing.
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